Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 120-139)


16 OCTOBER 2006

  Q120  Mr Bacon: The Audit Commission provided another suggestion of having a national buffer to allow NHS trusts to operate more sustainably. Will you implement that buffer?[9]

  Mr Nicholson: It will mean that we will have to take money from somewhere else in the system to create it.

  Mr Bacon: With respect, I did not ask what implementing the buffer would mean; I asked you whether you would implement it. If the answer is yes, please say yes; if it is no, please say no.

  Mr Nicholson: We have not come to a final conclusion.

  Mr Bacon: About whether you will or not?

  Mr Nicholson: That is right.

  Q121  Mr Bacon: When do you think you will come to a conclusion?

  Mr Nicholson: In the next few weeks.

  Mr Bacon: Okay.

  Mr Nicholson: We certainly need to do it, because soon we need to put out the new tariff for next year and the operating statements about the way in which the NHS will be financially managed next year.

  Mr Bacon: You will come to a conclusion in time for us to issue our report?

  Mr Nicholson: Yes.

  Mr Bacon: So, could you write to us about it?

  Mr Nicholson: Yes.

  Q122  Mr Bacon: Thank you. That is very kind. The Audit Commission also suggests: "The NHS Manuals for Accounts should be reviewed, made less prescriptive and more principle based and brought more closely in line with UK Generally Accepted Accounting Principles (GAAP)." Is that a recommendation you accept?

  Mr Douglas: Yes.

  Q123  Mr Bacon: The Report goes on: "This would also have the benefit of making NHS finance staff less reliant on specific Department of Health instructions and more reliant on their own professionalism." Would you accept that, too?

  Mr Douglas: Yes.

  Q124  Mr Bacon: Excellent. Paragraph 3.45 on page 43 talks about the organisations that were required to send in a recovery plan that would be reviewed by the SHAs and by the turnaround directors, and eventually released—the word used in the report—to the national programme office. As at 23 May, the national programme office had formally received 11 plans from organisations within the turnaround cohort. How many plans have now been received?

  Mr Nicholson: Sixty.[10]

  Mr Bacon: Sixty? So, 60 out of the 98?

  Mr Nicholson: Yes.

  Q125  Mr Bacon: And how many have been assessed and accepted?

  Mr Nicholson: The 60 have been accepted.

  Q126  Mr Bacon: Oh. So, how many have been rejected?

  Mr Nicholson: Well, I do not know whether we actually reject plans, but we send them back. The balance will have been sent back for more work to be done on them.

  Q127  Mr Bacon: Right. May I ask you about my own area, Norfolk? The new PCT in Norfolk—the combined PCT—starts with a very large deficit. I have got a document here from it. It says that it starts with a debt of £50 million from the former five PCTs. Work has been undertaken to identify the robustness of the projected position. The current year-end forecast is a projected deficit of £40 million. This sounds a lot compared with the national total. Norfolk only has 800,000 people. Are there special problems associated with the east of England and with Norfolk?

  Mr Nicholson: The east of England seems to have a lot of debt in it. That is absolutely true.

  Q128  Mr Bacon: Why is it so much more? It is pretty much more than everywhere including London, according to the SHA summaries that I have seen.

  Mr Nicholson: Yes.

  Mr Bacon: Why is that? It is significantly more. Most of them seem to be in the 30s, 40s or 50s of millions, and the east of England combined is at well over £200 million. Why is that?

  Mr Nicholson: There are a variety of reasons, depending on where in the east of England you want to talk about. Some of it is historic debt, and problems that have not been dealt with in the past, which have rolled on. Some of it is related to the kinds of things we talked about earlier in relation to contracts. There is a whole range. I do not think there is one particular issue that will identify the east of England as being special.

  Q129  Mr Bacon: You talked about the extra money going on salaries. Is it possible you could send us a note showing the increased spending—because everyone knows there has been a lot of extra money going into the NHS—since Agenda for Change, the GP contract and the consultant contract were implemented? Can you write to us with a table showing the amount of increased spending, the total of spending and in each year the total on salaries, so that we can see how much has gone on salaries out of the increase, and how much was left for other things?[11]

  Mr Nicholson: Yes.

  Mr Bacon: I will leave it to your artists to come up with a bar chart that shows it clearly, but to have it with numbers as well would be helpful.

  Mr Nicholson: Yes.

  Q130  Mr Bacon: How many hospitals have closed one or more wards?

  Mr Nicholson: I have not got that information.

  Mr Bacon: It must be accessible information.

  Mr Nicholson: We have a yearly census on the number of beds, but it is not something we would collect routinely, regularly.

  Mr Bacon: You could find out.

  Mr Nicholson: I do not know whether there is a mechanism.

  Mr Bacon: A quick e-mail, Mr Nicholson, would do it.

  Mr Nicholson: I do not know how practical it is.

  Q131  Mr Bacon: How many hospitals have actually reduced the number of nurses that they employ, recently? You do not collect figures on that either?

  Mr Nicholson: We collect total figures.

  Mr Bacon: It must be possible to work it out, surely, or just ask them. Each hospital must know how many nurses it employs, must it not? We often hear members of the Government standing up and saying how many nurses are employed. That can only be possible because information is taken and then aggregated.

  Mr Nicholson: Yes, we have got total figures.

  Q132  Mr Bacon: Well, if you could send us figures on how many hospitals have reduced the number of nurses they employ I would be interested to see that.[12] Could you say what are the total costs to trusts of delays in the national programme for IT in the health service, whether or not they are recoverable from "Connecting for Health"? A lot of trusts have complained both about the costs incurred from the sudden decision to cut "Information for Health" and about delays in the national programme causing them to incur costs on things like training, and various other things, that they cannot recover from CFH or anyone else. What is your figure for how much?

  Mr Nicholson: I hear all this; I have seen no evidence to support that assertion.

  Q133  Mr Bacon: You do not think that the trusts have incurred any costs that they cannot recover?

  Mr Nicholson: I have not seen any evidence that will support what you have just said. I have heard lots of talk about it—lots of chat—but I have not seen any numbers that would lead me to believe that was occurring.

  Mr Bacon: If you find any, would you send the Committee a note about it?

  Mr Nicholson: I will if I find any.

  Q134  Mr Bacon: How much was spent on planning new hospitals and extensions that were not built? We know about the £15 million for the Paddington health campus, but how much in total?

  Mr Nicholson: I am sorry; I have not got that.

  Mr Bacon: Is it possible you could send us a note on that as well?[13]

  Mr Nicholson: I am sure we could do that.

  Q135  Chairman: We have had problems with these notes in the last year. There can be no vagueness on the part of accounting officers in their answers on provision or otherwise of notes to this Committee, so you must read the transcript. You were asked some specific questions and you must tell us whether you can provide these notes or not.

  Mr Nicholson: Yes.

  Chairman: And you must bear personal responsibility for delivering these notes on time to this Committee and for their accuracy.

  Mr Nicholson: I understand.

  Q136  Mr Touhig: The NAO and Audit Commission Report, right at the beginning on page 1, tells us that next year spending will reach almost £93 billion and that "healthcare . . . remains the fastest growing area of public expenditure." Is our money safe in your hands?

  Mr Nicholson: Absolutely. Even though we have a deficit, which clearly we in the NHS are not proud of, it is a relatively small deficit and there is little evidence to support an idea that we are not spending the money on what it is meant to be spent on, which is improving services, more staff, buildings, treatments, drugs and all the rest of it. But there is lots of good evidence to show that it is being used to good effect so, yes, I think it is safe.

  Q137  Mr Touhig: I accept your point. The Chairman made the point at the beginning about improvements in the health service as a result of the investment. However, Mr Clark made a point about the number of PCTs that have problems; one third have financial problems. Is it not a fact that you negotiated nationally the pay increases for the consultants and GPs and you got it wrong?

  Mr Nicholson: We got it wrong.

  Mr Touhig: You got it wrong by about £300 million.

  Mr Nicholson: But we also got other things right, which improved that.

  Q138  Mr Touhig: I accept that. But the consultants and others believed you had your own mint. They thought you were going to print the money and just give it to them and, frankly, you did, did you not? You just caved in.

  Mr Nicholson: No, I do not think we did. If you take the GMS contract, there have been some significant improvements in primary care services which are demonstrable though the quality of outcomes.

  Q139  Mr Touhig: So consultants are working harder and doing more as a result of the extra money you have given them.

  Mr Nicholson: Overall, productivity has increased.

9   Note by witness: Earlier this year, the Secretary of State asked Sir Michael Lyons and the Audit Commission to undertake a review of the NHS financial regime. The final report was published in the summer. The Secretary of State is now considering options in respect of each of the report's recommendations. The Department will respond formally, in due course, and will then notify the Committee. Back

10   Note by witness: 60 is the number of category 1 & 2 received (those in most urgent need) out of 63. 31 out of 35 category 3 & 4 had also been received, making a total of 91 out of 98 received. Back

11   Ev 24 Back

12   Ev 24-33 Back

13   Ev 33 Back

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